Best High Interest Savings Accounts

Susan asked me to research the best high-interest savings accounts this month. And I'm glad she did because as much as we love to share high interest income investments, sometimes pumping up the yield on your regular old savings account can help you make more income, too.

So, in this article I'll share what high interest savings accounts are, what to look for, where to find them, and a formula to compare which high interest savings accounts are the best.

I think we're all familiar with how savings accounts work.

When you place your money in a bank, you are typically paid interest.

They pay you interest because they are using your money to make loans to other people and business, who pay the banks interest in return.

The interest rates a bank pays you are based on several things, but two of the big factors are liquidity and features.

Savings Account Liquidity

Liquidity means how easily assets can be converted into cash.

So, a roll of bills in your pocket is the most liquid asset you can get.

On the other extreme, owning an office building is not very liquid at all because it could take months to convert it to cash and the value may change by the time you can find a buyer.

Liquidity also applies to different savings and checking accounts that banks offer.

Below is a list of bank offerings rated from most liquid to least liquid.

  • Checking Account (most liquid)
  • Savings account
  • Money Market Deposit account
  • Certificate of Deposit (CD)
  • Savings Bond (least liquid)

A savings account would be less liquid than a checking account because there are usually restrictions and limits on withdrawals.

However, banks typically offer a higher interest rate to compensate you for the lack of liquidity.

Typically, the less liquid an account has, the more interest it offers.

Savings Account Features

One reason checking accounts rarely offer interest on money is because the banks offer so many features for you to access it.

They have mobile apps, unlimited deposits, and a brick and mortar branch network to service your account.

Savings account usually don’t offer as many features and are often less convenient.

Just like any other product, the more features they offer, the more expensive it is.

The less features a smart phone or car has, the cheaper it will be to produce.

The same is true for bank accounts, the less features, the less cost the bank has in offering them.

So, if you don’t mind an account with less features and less liquidity, you could be getting a better interest rate with a bank.

How Do You Know Which High Interest Savings Accounts are Best?
The Secret Formula.

You can compare the interest a savings account will pay you between banks using APY.

Annual Percentage Yield (APY) is the effective annual rate of return taking into account the effect of compounding interest.

Remember, the resultant percentage assumes that the funds will remain in the investment vehicle for a full 365 days.

It is a measurement of interest rates and does not include fees.

High interest savings accounts are federally insured for up to $250,000 if you open an account at an FDIC-insured bank.

High Interest Savings Accounts Fees and Requirements

Many banks charge monthly maintenance fees and have various requirements in order to qualify for their stated APY.

Below are some definitions for common requirements.

Minimum Deposit

A minimum deposit is the minimum amount of money required to open an account with a broker, financial advisor or bank.

Minimum Balance

A minimum balance is the minimum dollar amount that a customer must have in an account in order to receive a service benefit.

Transaction Limits

Most high savings account limit the amount of six withdrawals per month.

High Interest Savings Accounts to Consider

Below are some high interest savings accounts that are available for your consideration.

The account information presented below may have changed or may not be available to everyone.

Always double check with the bank for current rates.

This is meant to be a quick overview and may not represent all features and limitations of the accounts offered.

Marcus by Goldman Sachs Bank

Benefits

  • 2.25% APY
  • No monthly maintenance fees
  • No minimum deposit
  • No minimum balance
  • These savings accounts are FDIC insured

Limitations

  • No checking account or ATM network
  • No physical branches
  • Limited deposit options. Mail or link to an external account

Ally

Benefits

  • 2.20% APY
  • No monthly maintenance fees
  • No minimum balance
  • 24/7 customer care
  • These savings accounts are FDIC insured

Limitations

  • No cash deposits
  • No physical branches.
  • 6 transactions limit per statement cycle
  • Ally charges $10 for every outbound transfer after the sixth one

CIT Bank

Benefits

  • 2.45% APY
  • No monthly maintenance fees
  • These savings accounts are FDIC insured
  • 8am – 9pm customer care
  • These savings accounts are FDIC insured

Limitations

  • $100 minimum opening deposit
  • $25,000 minimum balance or monthly deposits of $100 or more
  • No physical branches
  • No checking accounts

VIO Bank

Benefits

  • 2.41% APY
  • No monthly maintenance fees
  • Fund via ACH
  • These savings accounts are FDIC insured

Limitations

  • $100 minimum opening deposit
  • $2,000 limit for outgoing ACH
  • No physical branches
  • ACHs take between two to five business days to post

American Express National Bank

Benefits

  • 2.10% APY
  • No monthly maintenance fees
  • No minimum balance
  • 24/7 customer care
  • These savings accounts are FDIC insured

Limitations

  • No checking account option
  • Checks need to be mailed in to be deposited
  • No mobile apps
  • No ATM – Reimburses $5 per month for out-of-network ATMs

Synchrony

Benefits

  • 2.25% APY
  • No minimum balance
  • ATM card
  • Reimburses $5 per month for out-of-network ATMs
  • These savings accounts are FDIC insured

Limitations

  • No checking accounts
  • No branches

Barclays

Benefits

  • 2.20% APY
  • No minimum balance
  • Most banks charge $30 or more for overdraft fees, but Barclays has only a $5 insufficient funds fee, charged if an online transfer would overdraw your account
  • These savings accounts are FDIC insured

Limitations

  • No ATM
  • No Checking Account
  • No cash deposits or withdrawals from ATM

HSBC Direct

Benefits

  • 2.22% APY
  • No minimum deposit
  • No monthly fee
  • These savings accounts are FDIC insured

Limitations

  • Initial deposit into Direct Savings must be new money

Citizens Access

Benefits

  • 2.35% APY
  • No monthly fee
  • These savings accounts are FDIC insured

Limitations

  • Initial deposit into Direct Savings must be new money
  • $5,000 minimum balance amount
  • No checking account
  • No mobile app

As you can see, there are a wide range of offerings from a wide range of banks.

If you already have a checking account with a bank, ask them if they offer any special deals, features, or rates to current customers for savings accounts.

If you are shopping around for a savings account, make sure you are using the most recent rate offerings.

Banks offer deals and promotions all the time and interest rates are always changing.

Remember, it's not just your investments that should be earning income – it's your savings, too.

Comments on Best High Interest Savings Accounts

  1. Oh my. It’s so hard to read this post. We keep getting mail from Citi about it and the rate definitely beats our local bank. However, we have a roof project coming up soon, I don’t want to put in the effort for the switch, etc. I also want to research more about how local banks help small-town economies and possibly write my own post.

    I think if I ran some numbers and saw the contrast of easy money pouring in it would be hard not to though… Thanks for conflicting me today:)

    1. Susan Lassiter-Lyons says:

      Ha! Sorry about that, Savvy! I feel you. I’m a big fan of community banks but I’m a bigger fan of income. So… I’ll join you in that conflict.

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